The House of Representatives should defeat flood insurance legislation passed by the Senate in January because it “would have the effect of misleading tens of thousands of homeowners concerning their vulnerability to flooding, undermine the flood program’s viability and increase taxpayer costs,” according to the Consumer Federation of America (CFA) .

The group said the Senate bill (S. 1926), which would delay for four years the premium increases and reforms mandated in the Biggert-Waters Flood Insurance Reform Act of 2012, also keeps in place “massive and often hidden subsidies even for high-income homeowners looking to live or build in flood prone areas.”

Echoing recommendations from some in the insurance industry along with the White House and House Republican leaders, CFA called on Congress to refocus the National Flood Insurance Program (NFIP) on charging actuarially sound rates and then using subsidies to help low-income homeowners in flood zones.

“The Senate proposal for reforming flood insurance asks America to stick its head in the mud, rather than address the problem of a flood program that is encouraging people to live in high-risk flood plains, unnecessarily risking people’s lives and possessions,” said J. Robert Hunter, CFA director of insurance and former administrator of the flood insurance program. “You cannot lower prices by ignoring the real risk of flood; real reform requires transparency and honesty about the true cost of living in flood zones for homeowners, developers and taxpayers.

In a letter to Congress, CFA said “Americans are not well served when the government runs an ‘insurance’ program that is not true insurance but rather, as the NFIP had become, an unwise and untargeted subsidy program that misled consumers into putting their homes, businesses and lives at risk in areas that are dangerously flood-prone. ”

CFA said it conducted a case study of Hancock County Mississippi flood maps after Hurricane Katrina hit and found that the average map (of 76 in the county) was 20 years old and 10 feet too low in measuring the 100-year flood elevation. Many home and business owners were misled into building unwisely, or buying homes that were in dangerous locations, or not buying needed insurance, in the county prior to Hurricane Katrina, according to the consumer advocacy group.

“It is much worse for consumers to be misled by inadequate rates from their own government than to have high rates that signal the real risk and informs the consumer to be careful,” CFA wrote in its letter to Congress. “Homeowners who buy new homes in areas that they think are safe from floods are harmed when old maps underestimate risk. Some are misled into believing their homes are safe from floods when they build or buy new homes built to an old map’s 100-year flood estimates, when the sites are, in fact, far below the real 100-year elevation. These homebuyers and their families are at risk of being killed or injured if a storm hits, or of having their homes or treasured possessions destroyed. Paying a little more and being truly aware of the risk is a blessing, not a curse, for consumers.”

CFA said that given the debt of the NFIP – approximately $24 billion – rather than delaying reforms, Congress should be looking at new ways to improve efficiency, such as reducing costs in the NFIP’s “Write Your Own” program, and focusing the program’s subsidies on the neediest residents.

CFA is not the only group to oppose delaying Biggert-Waters. Tax, climate and insurance groups have also criticized the Senate approach.